India’s mobile phone production by value more than doubled in FY22 to make the country the second-largest manufacturer of these devices globally, the government said.
India manufactured mobile phones worth Rs 5,277 crore in FY22, up from devices worth Rs 2,334 crore in FY21, the government said, crediting its production-linked incentive scheme for the growth.
“Due to the Production Linked Incentive (PLI) Scheme, India is currently one of the fastest-growing mobile phone manufacturers in the world and has emerged as the second-largest manufacturer of mobile handsets in the world in volume terms,” Rajeev Chandrasekhar, minister of state for electronics and information technology, said in a reply to Parliament.
The PLI scheme offers incentives of 4 to 6 percent to eligible companies on net incremental sales over the base year of mobile phones and electronic components manufactured in India for a period of five years. The government has approved 16 companies to get benefits – 10 mobile phone manufacturers and six electronic component makers.
India manufactured 300 million mobile phones in 2020-21, up from 60 million produced in 2014-15, said Amitabh Kant, the then CEO of NITI Aayog in January this year. The number of mobile phone manufacturing units in the country went up to 200 from two during this same period.
With a compound annual growth rate of 6 percent, demand for smartphones in India is expected to reach about 400 million in 2026 from 300 million in 2021, according to a recent report by Deloitte.
5G contribution
“This high demand is likely to be primarily created after the launch of 5G, which will alone contribute 80 percent of the devices (about 310 million units) by 2026,” the advisory firm said.
As domestic production rose, India’s mobile phone imports reduced 33 percent in FY22, said CRISIL, citing data compiled from the Directorate General of Foreign Trade.
The increased production of mobile phones, in effect, led to a rise in the import of components required to manufacture them. The country imported telecom devices worth $6.48 billion from China in FY21, compared to $5.6 billion in FY20.
India is now largely self-sufficient to meet domestic demand, which has been increasing over the years.
Data suggests that the increase in domestic production has been largely to cater to domestic demand as India’s mobile phone exports, despite increasing 56 percent in the previous financial year, remained minuscule globally.
The dominance of low-budget phones among phones manufactured in India has been cited as a factor for the country’s low share in exports to major mobile phone markets.
“India’s exports largely comprise low-end mobile phones, priced below Rs 10,000. But major markets such as the US, Hong Kong and Japan import mobile phones priced upwards of Rs 15,000 because of their high per capita income,” CRISIL said in its report.
However, exports are expected to increase as major handset makers such as Samsung and Apple ramp up manufacturing in India.
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